Will 2+1=4? GEP, Hubwoo Partnership Integrates Procurement Services with The Business Network

Earlier today, GEP and Hubwoo announced a partnership to integrate GEP’s procurement managed services business and source-to-pay applications (including its new SMART platform, which we've written about here and here) to Hubwoo’s business [information] network. GEP’s applications will integrate to the Hubwoo Business Network and its multi-tenant catalog and supplier integration capabilities. It’s similar to how SAP and other on-ramp applications integrate, except with an expanding set of XML-based data integration. GEP has its own APIs and XML-based protocols, and Hubwoo will need to work with GEP to build the associated integrations on its side. The duo will also integrate single-user sign-on credentials to allow a smoother user experience and administration.

Partnerships are easy to announce, but they only gain traction when there is true value to both parties. In our opinion, this is clearly the case. As an independent business network not owned by a software vendor, Hubwoo is a great partner for SaaS providers who don’t want to build their own network. Hubwoo would be a great partner for a good many source-to-pay vendors, but it’s also a strong partner for BPO providers who similarly don’t want to re-invent the wheel.

So in this case, GEP gets one of the larger (based on our volume estimates), near-turnkey networks that it can use, but Hubwoo gets value here too. Hubwoo, for its part, needs more on-ramps than just its SAP-native options (given SAP’s acquisition of Ariba) and those from its still fledgling Microsoft partnership. GEP is also an excellent potential partner here in that it brings its installed base of not just technology clients, but managed services clients. Of course, where the “rubber meets the road” here is the extent that GEP will use and adapt the Hubwoo network for its managed services clients (e.g., for more advanced supplier discovery for use in a tactical “buying desk” service) – and how GEP will use the Hubwoo network in a hybrid model with its existing catalog and supplier connectivity capabilities.

More broadly, there’s also the question of how much business logic and enhanced functionality for things like invoice pre-validation, category-specific support, and advanced workflow will reside in the applications instead of in the network. This is where there will be tension between application providers and the business networks that want to see their networks becoming increasingly “intelligent” (for example, using network participants to train the network to perform various tasks like invoice OCR training and whatnot).

This is where the business networks need to be built on an open platform, featuring a “partner layer” of sorts that will allow network partners to tailor the platform to create a personalized and private/hybrid version of their own network – and for large buyers who want to create a private/hybrid network of their own (i.e., what used to be called “private marketplaces” before “marketplaces” became replaced with “networks” in the terminology game).

There are a number of details of this partnership that we’re going to be exploring over the next few weeks so that we can gauge both intent and traction over time. We suspect it will be the first of a number of similar (and serious) network partnership deals that we’ll see in 2014 involving applications providers and networks like Hubwoo, OB10, IBX, Basware, and others.

There are also some strategic aspects to this, not only because both parties have their own short-to-medium term plans, but also because they are both very attractive to larger fish looking to add business network capabilities and/or an integrated application/knowledge/services platform to their business. We’ll outline the scenarios and some recommendations in future PRO research, but for now, we’ll only say that we’re encouraged by this. Buyers want healthy competitive provider ecosystems as I’ve highlighted in my Procurement Bill of Rights series (see complete links below) – and so do we. Competition and collaboration lead to innovation and increased value for all – especially those who choose to create a new class of procurement platforms in the cloud.